Apportionment is the technical
term for deciding how much of a firm's business income is taxed in the
state. For a company with all of its business in Utah and which has no
presence outside the state, the apportionment fraction is 100 percent. A
very large firm with operations all over the country, by contrast, may
have a fraction less than 1 percent.

The rule adopted by Utah
and by many other states uses a three-factor formula to determine a firm's
Utah income. The wage factor is the ratio of state wages to U.S.- wide
(water's edge) wages; similar ratios are calculated for sales to Utah residents
relative to U.S.-wide sales and property values. The apportionment fraction
is then the average of these three ratios. (A firm with no wages company
wide, for example, would only average two factors.)

The larger a firm is,
generally, a smaller percentage of its income is taxed in Utah. That of
course is not surprising, since almost by definition a large company will
be operating in many states and will only have a small portion of its activity
in Utah. By contrast, a company with all of its operation in Utah is bound
to be small.

For a firm with a given
amount of profits, the more that are apportioned to Utah the greater
will be the state tax.